COMPETITION AND MACROECONOMICS: SOME IMPLICATIONS OF SCHUMPETER'S THEORY OF DEVELOPMENT FOR MACROECONOMICS

The thesis develops an interpretation of Schumpeter's theory of development that places competition at the center of macroeconomic analysis. The categories of capital, investment, growth, development and accumulation are explored in light of an analysis of the concept of competition in Schumpeter's theory.;The thesis has three parts. First, it analyzes the structure of Schumpeter's theory of development, as presented in The Theory of Economic Development and Business Cycles. Second, the thesis synthesizes two accounts of the role of competition in the process of accumulation: Schumpeter's theory of development and Steindl's theory of secular stagnation. Steindl's theory differs from Schumpeter's in that he attempts to demonstrate how the process of competition leads to industry concentration and secular stagnation, while Schumpeter rejects the idea that the rise of oligopoly leads to stagnation in an innovative capitalist economy. Third, the thesis considers the implications of the analysis of Schumpeter's theory for macroeconomic. The destruction of capital as part of the competitive process is shown to play an important role in the theory of economic growth. The idea that investments are competitive rather than additive is seen as a major contribution of Schumpeter's theory to macroeconomics. Finally, the thesis shows how a Schumpeterian perspective on competition and investment may strengthen the "microeconomic foundations" of Keynesian macroeconomics by showing why industry dynamics is the proper starting point for macroeconomic theory.